Estonia: Country’s largest brewery, Saku Õlletehas, accumulated 44.8% market share in H1 2005

Estonia’s largest brewery Saku Õlletehas earned a net profit of 19.3 mln kroons in the first half of this year, a growth by 3.2 mln kroons from the same time last year, the company told the Tallinn bourse, LETA has recently posted. Saku’s second quarter profit was 14.9 mln kroons, by 3% less than a year ago. (1 EEK (Estonian Kroon) = 0.077 USD)

In the first half of 2005 Saku Õlletehase AS sold 39.3 mln litres of beverages, 6.8 mln litres or 21% up on the same period in 2004. Revenues totalled EEK 304.2 mln, a 19.2% improvement on a year ago. The main growth drivers were beer and other alcoholic beverages.

According to the Estonian Breweries Association, in the first six months of 2005 the Estonian beer market grew by roughly 13%. The accumulated market share of Saku Õlletehase AS was 44.8% (a year ago: 41.5%). The upswing in market share was facilitated by a successful launch of products in novel high-quality AM packaging in February 2005 which added value to the entire beer category. The company has launched a new upper economy beer brand Blond during the period and there was held successful consumer games for the main brand Saku Original, which is the biggest beer brand in Estonia.

Saku Õlletehas exported 12% from its total volume, mainly to the Baltic states and also to Finland. Finnish export is distributed by Sinebrychoff OY, which is the market leader in Finnish beer market.

The company has expanded his activities on other beverages markets. Sturdy growth continued also in the cider and gin long drink markets which expanded by 10.3% and 60.5% on a year ago respectively. Saku Õlletehase AS increased its sales in the local cider market by 9.9% and in the local long drink market by 106.6%, maintaining its position in the former (a 33.4% share in 2005 against 33.5% in 2004) and improving its position in the latter (a 26.6% share in 2005 against 20.7% in 2004).

Expenses for the first half of the year totalled EEK 267.4 mln or 18.8% up on the same period in 2004. The largest growth occurred in the cost of materials, consumables and supplies, largely on account of expanded sales and production volumes.

Compared to a year ago, the volume of beverages sold in one-way packaging (cans and PET) has grown 52% to 73% of overall sales (58% a year ago), triggering an increase in related materials costs. Rising operating volumes and proactive marketing magnified transport and advertising expenses whereas personnel expenses increased primarily due to organisational changes implemented in the first quarter.

The growth in operating volumes and market share had a definite positive impact on our results of operation: Saku Õlletehase AS ended the first half of 2005 with an operating profit of EEK 36.8 mln, an EEK 6.6 mln improvement on a year ago, and a net profit of EEK 19.3 mln (EEK 16.1 mln a year ago), Saku told the bourse.

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